'While industrial production and manufacturing output has proved resilient into the end of 2016, its sustainability over 2017 is in question'. - Fabrice Montagné and Andrzej Szczepaniak, Barclays

British manufacturing production rose at a stronger than expected pace in December, despite the country's decision to leave the European Union. Official data released by the Office for National Statistics on Friday showed manufacturing output grew 2.1% in the final month of 2016, following November's upwardly revised gain of 1.4% and surpassing analysts' expectations for a mild increase of 0.3%. On an annual basis, manufacturing production advanced 4.0% in December, the largest gain since April 2014. Meanwhile, industrial output climbed 1.1% in the same month, compared with the previous month's downwardly revised increase of 2.0%/ However, the figure topped analysts' forecasts of a 0.2% decline. Year-over-year, industrial production jumped 4.3%, the strongest increase since January 2011. Furthermore, the ONS reported that the UK construction sector also grew at a stronger than anticipated pace, rising 1.8% in December, while economists predicted an increase of 1.1%, following November's upwardly revised 0.4% increase. Separately, the ONS reported the UK's trade gap narrowed to 10.9 billion pounds in December, whereas analysts expected an increase to 11.5 billion pounds in the reported period. Meanwhile, November's deficit was revised down to 11.6 billion pounds from the originally reported 12.2 billion pounds.

'Whatever the outcome of France's presidential elections, it probably won't raise the odds of an exit from the euro.' – Stefania Spezzati, Bloomberg

Pair's Outlook

During the early hours of Friday's trading session the common European currency began the day and traded against the US Dollar between the levels of significance, which together have provided the pair with support for the past three consecutive trading sessions. At the start of the session the currency exchange rate was above the monthly PP, which is at 1.0650. The forecast of a decline remains in force, as it can be clearly seen that slowly but surely the pair is moving lower. After passing the monthly PP the rate is most likely set to fall to the 55-day SMA at 1.0688.

Traders' Sentiment

SWFX traders are neutral bullish on the pair, as 51% of trader open positions are long. Meanwhile, 60% of trader set up orders are to sell the Euro.

'We maintain our view that risk reward for USD longs has improved considerably.' – BNP Paribas (based on PoundSterlingLive)

Pair's Outlook

The Cable's losses were limited on Friday, but with the pair continuing to gravitate towards the 1.25 major level. Risks are now skewed to the downside, as there is a potential sell signal present today, which indicates the Sterling could soon slide back under the 1.24 mark. However, the Pound is first required to pierce a number of supports, such as the weekly PP, the monthly PP, the 55 and the 100-day SMAs. Technical studies somewhat support this outlook, as they are giving bearish signals in the medium and long-term timeframes. A rally today is likely to just be the continuation of last week's consolidation trend, when the Cable kept moving towards the 1.25 handle.

Traders' Sentiment

Traders' sentiment remains bullish, now at 62% (previously 61%). Meanwhile, the share of sell orders inched down from 56 to 53%.

'According to our long-term valuation models, the yen remains significantly undervalued against the US dollar despite modest gains early this year.' – BTMU (based on FXStreet)

Pair's Outlook

Friday ended with the USD/JPY currency pair putting the bearish trend-line to another test, but ultimately leaving it intact. Another attempt was made earlier today, when the pair opened with a bullish gap and tried to reclaim the 114.00 mark. The weekly R1, however, appears to be providing strong resistance, which could cause the Buck to be sold sufficiently, making bears take over the market today. In this case the down-trend will be preserved once again, although risks of a breakout are now high. Either way the second resistance area around 114.30 is expected to hold, whereas any bearish development is to be limited by the 20-day SMA circa 113.38.

Traders' Sentiment

Bulls lost some numbers over the weekend, being that 58% of all open positions are now long (previously 61%).

'Global uncertainty from the U.S., Europe and on the Korean front will drive global prices high again as prices couldn't break the December-low.' – Hareesh V, Geofin Comtrade Ltd. (based on Reuters)

Pair's Outlook

The yellow metal began the week near the 1,230 level, where it traded rather flat during the early hours of Monday's trading session. The bullion began the week below the newly calculated weekly PP, which is located at 1,232.24. It is most likely that the commodity price will continue to decline by the end of the day, as the closest support level is located at 1,219.77, where the weekly S1 is located at. In addition, the weekly S1 is supported by the 38.20% Fibo at 1,219.20 level. After encountering this support level, the bullion is likely going to rebound and begin to regain strength.

Traders' Sentiment

SWFX market sentiment remains bullish, as 55% of open positions are long. In the meantime, 57% of trader set up orders are to buy the metal.

The pair moved to the upper part of near-term 0.7600/0.7700 range, following Friday’s rally that confirmed higher base at 0.7600 zone.

Firm bullish setup of daily studies is supportive for break above 0.7700 barrier and final push towards target at 0.7776 (08 Nov peak) to mark full retracement of 0.7776/0.7158 descend.

Initial support lies at 0.7656 (session low) ahead of rising daily Tenkan-sen at 0.7621 that continues to underpin ascend since early Jan and lower breakpoint at 0.7600 (higher base, reinforced by rising 20SMA).

However, extended sideways mode could be expected while the price holds within 0.7600/0.7700 range.

Res: 0.7687, 0.7694, 0.7732, 0.7765
Sup: 0.7656, 0.7621, 0.7600, 0.7568

The pair cracked psychological 114.00 barrier today, on extension above initial target at 113.91(Fibo 61.8% of 115.36/111.57 downleg). Fresh bulls were limited by falling 30 SMA for now, but the downside stays protected by 20SMA at 113.35 that marks initial support. Expect near-term action to remain biased higher while the price remains above upside-turning daily Tenkan-sen (currently at 112.85). Daily close above 113.91 is needed to signal further recovery and open way towards next pivotal barrier at 114.54 (daily Kijun-sen).

Res: 113.91, 114.13, 114.54, 114.93
Sup: 113.35, 113.20, 112.85, 112.50

Strong bullish acceleration in early Monday's trading sidelined immediate downside risk after last Thu-Fri weakness was contained by daily Ichimoku cloud at 1.2442.

Fresh rally probes above strong barrier at 1.2525 (daily Tenkan-sen) would trigger extension towards next pivot at 1.2580 (last week's high / near Fibo 61.8% of 1.2704/1.2345 downleg).

Improving near-term technicals are supportive, together with bullishly aligned dailies, with daily close above Tenkan-sen to confirm bullish near-term stance.

Focus is expected to stay shifted at the upside while daily cloud holds, with sustained break above 1.2580 to confirm higher low at 1.2438 (Friday's low) and signal further upside.
Conversely, increased downside risk could be expected on penetration into thickening daily cloud (currently spanned between 1.2399 and 1.2442).

Res: 1.2548, 1.2567, 1.2580, 1.2620
Sup: 1.2495, 1.2454, 1.2442, 1.2403

The Euro bounced in Asia after extension of two-day downleg from 1.0708 lower top found footstep at 1.0606 (55SMA) that so far holds. Overall picture remains bearish and favors fresh weakness after correction. Break below initial supports at 1.0606/1.0583 (55SMA / 50% of 1.0339/1.0827) would expose daily cloud base (1.0550) and Fibo 61.8% support at 1.0525 Broken Kijun-sen (1.0641) that now acts as initial resistance is under pressure, with upticks expected to be ideally capped under 1.0665 (Friday's high/falling 5SMA). Upper pivot lies at 1.0707 (20 SMA) and only firm break here would neutralize near-term bears.

Res: 1.0665, 1.0707, 1.0755, 1.0775
Sup: 1.0603, 1.0583, 1.0550, 1.0525

EUR/USD

Current level - 10648

The downtrend is intact, heading towards 1.0580, en route to 1.0500 area. Crucial resistance on the upside is 1.0700.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 113.68

The bias remains positive, for  break through 114.00 resistance area, towards 115.65 zone.

GBP/USD

Current level - 1.2512

The intraday outlook is neutral after the recent reversal at 1.2436. Key support lies at 1.2415 and major resistance is projected at 1.2610.